District Court of Nassau County, First District, November 29, 2018

Michael A. Katz, Katonah, for defendant.

Sheldon May & Associates, P.C., Rockville Centre (Jordan Slavens of counsel), for plaintiff.

The plaintiff commenced this breach of contract action in May of 2006, to recover the balance owed by defendant cardholder under a credit card agreement. On August 22, 2006, the plaintiff was awarded a default judgment in the sum of $14,926.07. On February 26, 2018, some 12 years later, the defendant moved by order to show cause to vacate his default and the money judgment rendered thereon. By decision and order of June 18, 2018 (Darcy, J.), the matter was set down for a traverse hearing, as the court found that the defendant had successfully raised an issue of fact as to whether personal jurisdiction was properly obtained. A traverse hearing was held on August 16, 2018. This court granted the defendant's motion, vacated the money judgment and dismissed the plaintiff's action in its entirety.

Now before the court is a motion by defense counsel for an award of reasonable attorney's fees and costs. "Under the general rule, attorney's fees are incidents of litigation and a prevailing party may not collect them from the loser unless an award is authorized by agreement between the parties, statute or court rule" (Hooper Assoc. v AGS Computers, 74 NY2d 487, 491 [1989]).

In the case at bar, the card member agreement specifically authorizes the recovery of [*2]attorney's fees. Thus, defense counsel's motion is based thereon. Moreover, counsel argues that the defendant is the prevailing party, as he successfully asserted and won his claim of a lack of personal jurisdiction. The card member agreement, which the plaintiff's complaint was based upon, contains the following language: "Default/Collection Costs . . . In the event we refer your Account after your default to an attorney who is not our regularly salaried employee, you agree to pay the reasonable fees of such attorney and actual court costs."

Thus, clearly the agreement provides for the plaintiff's right to recover attorney's fees and costs in any successful action on the contract. The defendant, however, argues that General Obligations Law § 5-327 creates a reciprocal right for the defendant's recovery of such attorney's fees and costs on a consumer contract (see Velocity Investments, LLC v Cocina, 2011 WL 13137640 [Sup Ct, Erie County, Aug. 10, 2011, No. 2007/1915]; compare Christie's, Inc. v Croce, 5 F Supp 2d 206 [SD NY 1998]). The court agrees.{**62 Misc 3d at 495}

In pertinent part, General Obligations Law § 5-327 (2), which applies to the instant consumer transaction, provides the following:

"Whenever a consumer contract provides that the creditor, seller or lessor may recover attorney's fees and expenses incurred as the result of a breach of any contractual obligation by the debtor, buyer or lessee, it shall be implied that the creditor, seller or lessor shall pay the attorney's fees and expenses of the debtor, buyer or lessee incurred as the result of a breach of any contractual obligation by the creditor, seller or lessor, or in the successful defense of any action arising out of the contract commenced by the creditor, seller or lessor. Any limitations on attorney's fees recoverable by the creditor, seller or lessor shall also be applicable to attorney's fees recoverable by the debtor, buyer or lessee under this section. Any waiver of this section shall be void as against public policy" (emphasis added).

Simply stated:

"The statute evens the playing field between a consumer and a creditor, seller, or lessor by providing that whenever a consumer contract provides that the creditor, seller, or lessor may recover attorneys' fees, a reciprocal right shall be implied on behalf of the consumer (the debtor, buyer, or lessee). As such, even if not provided for by contract, a consumer may recover its attorneys' fees in a successful breach-of-contract action against a creditor, seller, or lessor or in the event of a successful defense of an action for breach of contract brought by the creditor, seller, or lessor." (Robert L. Haig, Commercial Litigation in New York State Courts § 53:73 [4th ed 4A West's NY Prac Series 2018].)

Accordingly, the defendant's motion is granted. Defense counsel's request for attorney's fees and expenses shall be placed on the court's inquest calendar.